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Banning Uber and Airbnb should be 'last resort,' says EU

It's a win for the sharing economy. The European Commission provides guidelines on how companies like Uber and Airbnb should be regulated.

Tim Graham/Getty Images

Uber is one of the best-known companies in the sharing economy.

Andrew Caballero-Reynolds/AFP/Getty Images

Uber, Airbnb and other so-called sharing-economy companies should not be banned if at all possible, recommended the European Commission in new guidelines issued Thursday.

The guidelines were drawn up to look at how existing European law should be applied to the sharing economy. The idea is to bring clarity to how companies like Uber and Airbnb, which represent a relatively new business model, fit into the established industries in individual member states.

Companies in the sharing economy are posing perplexing regulation questions in the markets they enter. Lack of understanding over how European law affects these companies -- mingled with very different regional regulations -- means each country has devised their own way of handling Uber and Airbnb.

In Brussels, the center of EU activities, Uber has faced bans. Estonia, on the other hand, has been praised by the EU for its balanced approach towards incorporating sharing economy companies into the market.

Companies using this burgeoning business model contributed 25 billion euros to the European economy last year, according to Commissioner Vice President Jyrki Katainen. He predicts they will also boost job growth to the Europe. As such, the EU is demanding that countries have a better reason than direct competition with established businesses to impose bans on sharing-economy companies.

"Absolute ban of activity should only be a measure of last resort," said Commissioner Elżbieta Bieńkowska, speaking at a press conference in Brussels on Thursday. "We should not treat it as a threat."

Airbnb said the new guidelines will help ensure a "stable and consistent regulatory environment" for sharing economy users across Europe. "Europe has the potential to be the world leader for the sharing economy," wrote Patrick Robinson, Airbnb's head of public policy in Europe, in a blog post Thursday.

The sharing economy will still to shoulder some responsibilities, according to the guidelines. Companies must make sure they are paying proper taxes, establishing and upholding consumer trust and not abusing labor laws. For a company to be banned, it would have to be found violating one or more of these requirements.

The guidelines are not just about regulating Uber, reiterated Katainen, but how member states will regulate sharing-economy companies that exist further down the line. It is an acknowledgement that the sharing economy will continue to grow regardless of objections from established players, like London's black cab drivers who objected vehemently to the arrival of Uber.

"Today, the European Commission has made it clear that EU laws protect collaborative economy services against undue restrictions," said an Uber spokeswoman in a statement. "Member States should review regulations that undermine the development of such services."